Selling materials, labor, and overhead standards is challenging. standards are set too low, companies might purchase interior products and employees might not work to their full potential. If standards are set too high, companies could be unable to offer a quality product at a profitable price and employees could be overworked. The ethical challenge is to set a high but reasonable standard. Assume that as a manager you are asked to set the standard materials price and quantity for the new 0,000 CKB Mega-Max clip, a technically advanced product To properly set the price and quantity standards, you assemble a team of specialists to provide input.
Required
Identify for tÿpes of specialists that you would assemble to provide information to help set the materials price arid quantity standards Briefly explain why you chose each individual.
Want to see the full answer?
Check out a sample textbook solutionChapter 23 Solutions
WILD'S FUNDAMENTAL ACCOUNTING PRINCIPLE
- Richins Company is considering the acquisition of a computerized manufacturing system. The new system has a built in quality function that increases the control over product specifications. An alarm sounds whenever the product falls outside the programmed specifications. An operator can then make some adjustments on the spot to restore the desired product quality. The system is expected to decrease the number of units scrapped because of poor quality. The system is also expected to decrease the amount of labor inputs needed. The production manager is pushing for the aquisition because he believes that productivity will be greatly enhanced - particularly when it comes to labor and material inputs. Output and input data follow. The data for the computerized system are projections. Current System Computerized System Output (units)…arrow_forwardData Screen Corporation is a highly automated manufacturing firm. The vice president of finance has decided that traditional standards are inappropriate for performance measures in an automated environment. Labor is insignificant in terms of the total cost of production and tends to be fixed, material quality is considered more important than minimizing material cost, and customer satisfaction is the number one priority. As a result, production and delivery performance measures have been chosen to evaluate performance. The following information is considered typical of the time involved to complete and ship orders. Waiting time:From order being placed to start of production ..................................... 8.0 daysFrom start of production to completion ..................................................... 7.0 daysInspection time ....................................................................... .............................. 1.5 daysProcessing time…arrow_forwardWorldwide Corporation is a highly automated manufacturing firm. The vice president of finance has decided that traditional standards are inappropriate for performance measures in an automated environment. Labor is significant in terms of the total cost of production and tends to be fixed, material quality is considered more important than minimizing material cost and customer satisfaction is the number one priority. As a result, delivery performance measures have been chosen to evaluate performance. The following information is considered typical of the time involved to complete orders: - Wait time: -From order being placed to start of production -From start of production to 10.0 days completion - Inspection time 1.5 days - Process time…arrow_forward
- Wolk Corporation is a highly automated manufacturing firm. The vice president of finance has decided that traditional standards are inappropriate for performance measures in an automated environment. Labor for this company is insignificant in terms of the total cost of production and tends to be fixed, material quality is considered more important than minimizing material cost, and customer satisfaction is the number one priority. As a result, delivery performance measures have been chosen to evaluate performance. The following information is considered typical of the time involved to complete customer orders. From time order is placed to time order received by manufacturing 18.0 days From time order is received by manufacturing to time production begins 9.0 days Inspection time 3.5 days Process (manufacturing) time 7.0 days Move time 4.5 days What is the production (manufacturing) lead time for this order? Multiple Choice 34 days. 16…arrow_forwardYou work for Alphabet Holdings Plc as a junior management accountant. The board of directors are considering ways to improve the suboptimal performance of an investment in a manufacturing company called DEF products Ltd. As you can see from the table below the directors are considering closing products Bozon and Carbon in an effort to improve overall profitability. You spot that marginal costing would show the results differently and may affect the directors’ decision. Requirements for Question 2 Use your knowledge of management accounting and marginal costing to calculate the contribution of each product Use your findings from part (a) and appropriate academic references to explain whether the company should stop making product Bozon Use your findings from part (a) and appropriate academic references to explain whether the company should stop making product Carbon Discuss how and why marginal costing calculates contribution to pay overheads and why this is…arrow_forwardRachel Boyce, president of a company that manufactures electronic components, has a number of questions concerning quality and quality costs. She has heard a few things about quality and has asked you to respond to the following questions. Required: 1. What does it mean to have a quality product or service? Explain how product quality and conformance are related. 2. Yesterday, my quality manager told me that we need to redefine what we mean by a defective product. He said that conforming to specifications ignores the cost of product variability and that further reduction of product variability is a veritable gold minejust waiting to be mined. What did he mean?arrow_forward
- The comptroller wants to set the standards according to a study done by a consulting firm for a company. The consulting firm used the following assumptions: The machines never break down. Workers never take a break. The material used is perfect. The material arrives on time. No one takes a day off. Workers are well trained. Workers do not make defective units. What kinds of standards are these? Will the workers be motivated to achieve these standards?arrow_forwardBill Christensen, the production manager, was grumbling about the new quality cost system the plant controller wanted to put into place. If we start trying to track every bit of spoiled material, well never get any work done. Everybody knows when they ruin something. Why bother to keep track? This is a waste of time. Besides, this isnt the first time scrap reduction has been emphasized. You tell my workers to reduce scrap, and Ill guarantee it will go away, but not in the way you would like. Required: 1. Why do you suppose that the controller wants a written record of spoiled material? If everybody knows what the spoilage rate is, what benefits can come from keeping a written record? 2. Now consider Bill Christensens position. In what way(s) could he be correct? What did he mean by his remark concerning scrap reduction? Can this be avoided? Explain.arrow_forwardBecause of high production-changeover time and costs, a director of manufacturing must convince management that a proposed manufacturing method reduces costs before the new method can be implemented. The current production method operates with a mean cost of $220 per hour. A research study will measure the cost of the new method over a sample production period. Develop the null and alternative hypotheses most appropriate for this study. Comment on the conclusion when H0 cannot be rejected. Comment on the conclusion when H0 can be rejected.arrow_forward
- A cost analyst showed the company president a graph that portrayed the firm’s utility cost as semivariable. The president criticized the graph by saying, “This fixed-cost component doesn’t look right to me. If we shut down the plant for six months, we wouldn’t incur half of these costs.” How should the cost analyst respond?arrow_forwardWhich of the following statements is true? Eliminating nonproductive processing time is particularly important in a bottleneck operation. Payment of overtime to a worker in order to relax a production constraint could increase the profits of a company. Which of the following statements is true? In a factory operating at capacity, every machine and person should be working at the maximum possible rate. One way to increase the effective utilization of a bottleneck is to reduce the number of defective units.arrow_forwardThe head of production at your manufacturing facility said, “Our manufacturing processes are doing great. All our variances for materials, labor, and overhead are favorable. Actual costs for all our products are far below standard costs. We are killing it!” You, as company controller, just shake your head and think of how your respond to the head of production. What would you say?arrow_forward
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
- Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage Learning